Chapter 4: Arbitration: Definition, Process, and Features
4.6 Costs of arbitration
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3. A party lacks the legal capacity to dispose its disputed right as per the law governing its capacity
4. A party fails to present its case fully due to lack of notification of the arbitrator’s appointment or the proceedings, or due to the arbitrator’s breach of due process.
5. The award lacks the parties’ choice of law application for the dispute.
6. The proceedings were impaired by irregularities that affected the award, or the award issuance was delayed beyond timeframe.
7. The arbitrator decides on issues outside the scope of the terms of submission to arbitration or not within its terms.
8. The tribunal’s composition or arbitrator’s appointment not according to the parties’
arbitration agreement or the arbitration law.
The court can also set aside an award if the subject in dispute is not arbitrable or conflicts with public policy and the state morality133. Parties must be notified of the issuance of the award by receiving an original signed copy within 15 days of issuing it. The award shall be ratified in court for reinforcement. The award can be challenged in the court of appeal for set aside based on the grounds above. However, a decision issued by the court can be challenged in the court of cassation within 30 days from the date of judgement. It is noted that arbitrators must sign an award on all pages as per UAE arbitration law.
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how much each party contributes. The method of charging the arbitrator along with the deposits required are also agreed upon. If parties don’t agree on the cost distribution, the tribunal may determine and assess the costs134. The ICC required a $5000 deposit paid by the claimant when filing a request for arbitration. Another $5000 is due from any additional party requesting to join the arbitration. Next is the provisional advance paid to the secretary general by the claimant upon receiving the request to cover costs of preparing the terms of reference and constituting a tribunal. Lastly an advance on costs is required, as an amount set by the court after receiving an answer to the request for arbitration. Parties will pay an equal amount of advance for the secretary to send the file to the tribunal. The previous payments made by the claimant however are deducted from this advance payment.
In a study conducted by the Singapore International Arbitration Centre (SIAC) in October 2016, depicting the average cost and time of arbitration, it was deduced that it takes a tribunal 13.8 months with a cost of 80,337 USD. This was studied in a 3-year time from April 2013 to July 2016135. In 2021, SIAC administered 469 new cases for a USD 6.54 billion sum in dispute136.Although SIAC rules have a procedure for dismissing statements of defense or claims, the Act is silent on a fixed time limit for settling the arbitration.
134 n(127) 59
135 Ansul Shah, ‘International Commercial Arbitration in India: Challenges and Opportunities’ (DPhil thesis, The Maharaja Sayajirao University Of Baroda Vadodara 2021)
<https://www.proquest.com/pqdtglobal/docview/2563495442/DB0F5B6386184F51PQ/1?accountid=178112
>
136Singapore International Arbitration Center Annual Report (2021) <https://siac.org.sg/wp- content/uploads/2022/06/SIAC-AR2021-FinalFA.pdf> accessed 11 November 2022
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It takes one to two years in England for an award to be passed. According to the LCIA, the median time to resolve disputes is 20 months with USD 192,000.
DIAC has a non-refundable AED 5000 registration fee to be paid for every request for arbitration and for every counterclaim filed. Tribunal fees are fixed by the Centre as per their applicable table of fees. This shall also cover the arbitrators’ and experts’ expenses. The Centre then fixes an advance payment to cover its administrative costs for the said claims and counterclaims. The amount could be readjusted throughout the arbitration. If no amounts for the dispute are specified in the claim or counterclaim, DIAC may fix the advance costs.
These are paid equally by the parties. If either party fails to pay, the other party shall complete the payment for the application to proceed. DIAC also sets separate advance payment for claims and counterclaims and each party shall pay what’s due respectively. This allows DIAC to send the case to the tribunal. An increase in cost is conveyed to DIAC by the tribunal. If no payment is made, the administrator refers to the arbitration court to suspend the proceedings with a 15-day time limit for payment before the claims are considered withdrawn. Parties can reraise the same claims at other proceedings137. Advance costs must be paid prior to hiring an expert to cover the expenses and fees. Fees of legal representatives and a party’s cost are evaluated by the tribunal138. The tribunal will issue an award regarding the costs of arbitration and its distribution amongst the parties. The termination of proceedings prior to award issuance will cause the arbitration court to fix the
137 Article 2.9 of appendix 1 2007 DIAC Arbitration rules 138 Article 36.1 DIAC 2022 Arbitration rules
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arbitration center administrative fees along with the fees and expenses of the tribunal.
Deciding on tribunal fees depends on the speed and efficiency of the commencement and the composite of the case. The Center may fix costs higher or lower than that of the table due to certain circumstances. The arbitration court may consider these circumstances including the change in the amount claimed or counterclaimed, additional claims made, changes in the tribunal’s estimated expenses, and unpredicted complexity in the case. Any unused amounts will be refunded to the parties upon deducting tribunal fees and expenses, and Centre administrative costs.
DIAC table of fees is as follows. 5% of the award amount less than or equal to AED 40,000 should be paid as court fees to get consent award. For example, an award worth AED 6 million will cost AED 40,000 instead of AED 300,000 as court fees only. AED 5000 fee is required to open a file. The advance payment in the tribunal’s fees is set by the Centre with reference to a maximum and minimum indicated in the table of fees. It corresponds to the full amount claimed or counterclaimed plus 20% of the tribunal’s fee advance is added to the cost of arbitration’s advance. This covers the tribunal’s expenses. In an institutional arbitration139 between two contracting companies S and F, the respondent F failed to return the performance bond to the claimant S. The tribunal ordered the respondent to pay the amount due under the subcontract while marking the bond null and void. In addition, 5%
annual interest on the amount from the date of the final award until full settlement. AED 5000 was paid by the respondent to the claimant as DIAC fees, in addition to AED 63,000
139 DIAC case (6/2021)
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arbitrator fees and AED 14,000 legal costs. This case was closed in 5 months and 12 days, hence depicting that arbitration cases take longer than DAB. In a case with a Spanish seat law and ICC rules held between a manufacturer of coke and refined petroleum products, the award amounted to US$38,073,332.62 and took 4 years to conclude140. Administrative expenses and tribunal fees cost US$797,200. This shows that arbitration can take years to conclude with very high costs.
Figure 3: DIAC table of costs and fees
140 SSK Ingeniería y Construcción S.A.C v. Técnicas Reunidas de Talara S.A.C [2022] , ICC Case No.
23711/JPA <https://jusmundi.com/en/document/decision/en-icc-case-id-no-1128-monday-1st-april- 2019#decision_8046>
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